Results obtained indicated that cell proliferation and more specifically replication of carcinogen-damaged DNA prior to the repair of a critical lesion or lesions appear to be an essential step in the induction of initiated hepatocytes. Initiated hepatocytes were monitored by selective in vivo proliferation of these cells into islands of putative preneoplastic hepatocytes positive for gamma-glutamyl transpeptidase (Nature 275:60-62, 1978). Experiments are in progress to determine the critical lesions in liver DNA, induced by carcinogens such as N-methyl-N-nitrosourea, 1,2-dimethylhydrazine and diethylnitrosamine, responsible for the development of preneoplastic hepatocyte populations. Experiments are also in progress to determine whether replication of carcinogen-damaged DNA, prior to the repair of the critical lesion is an obligatory step for the induction of not only preneoplastic but also neoplastic hepatocytes. Experiments designed to determine the carcinogen-induced lesions in DNA that permit in vivo replication revealed that N-7-methylguanine, O6-methylguanine, N-3-methyladenine and possibly phosphotriesters induced by dimethylnitrosamine in rat liver DNA permit in vivo replication. Currently experiments are in progress to determine the nature and in vivo fate of such carcinogen-modified replicated DNA.